Goldman Sachs is Considering a Bitcoin Trading Operation, but CEO Retains a Neutral Position on the Cryptocurrency

Goldman Sachs is Considering a Bitcoin Trading Operation, but CEO Retains a Neutral Position on the Cryptocurrency

By Rebecca Campbell - min read
Updated 22 May 2020

Wall Street investment bank Goldman Sachs is thinking about launching a new trading operation, geared specifically toward bitcoin and other cryptocurrencies.

According to the Wall Street Journal, the bank’s exploration into the trading of digital currencies is still in the ‘early stages.’ However, it added that the venture may not amount to anything. If it comes to fruition, it would be the first time a major Wall Street company has entered the cryptocurrency space.

“In response to client interest in digital currencies, we are exploring how best to serve them in this space,” a Goldman Sachs spokeswoman said in a statement.

News of Goldman Sachs’ consideration comes after Jamie Dimon, CEO of JPMorgan Chase, labelled bitcoin ‘a fraud,’ while China sees several prominent bitcoin exchanges halting their mainland trading operations.

More recently, Larry Finks, chairman and CEO of BlackRock, the world’s largest investment management corporation, claimed that digital currencies reflect the amount of money laundering taking place.

“When I think about most of the cryptocurrencies, it just identifies how much money laundering is being done in the world,” he said.

Despite this, optimism remains about the market’s potential.Alex Mashinsky, CEO of Celsius, a decentralised Ethereum based consumer peer-to-peer credit ecosystem, said that the growth of the crypto market over the past two years has surpassed the public market, which are hitting new highs almost daily.

“Even Goldman Sachs can’t sit idle and see this asset class balloon without them. Over $150 billion in capital is now invested in this asset class and this number is expected to grow 10x over the next decade,” he said.

Morgan Stanley’s CEO, James Gorman, has also spoken in favour of bitcoin. Shortly after Dimon’s remarks, Gorman said that bitcoin is ‘certainly something more than just a fad.’

While Gorman hasn’t invested in bitcoin, he knows that it’s ‘not something that is inherently bad.’

“It’s a natural consequence of the whole blockchain technology,” he added.

The fact that Goldman Sachs is considering a cryptocurrency trading operation may indicate the major financial firms now believe that the market has reached a level of maturity required for institutional money.

Dr. Sol Lederer, blockchain director at LOOMIA, a tech company that creates innovation in smart products secured through the blockchain, agrees.

“It’s becoming apparent that bitcoin has matured past the point where people’s knee-jerk reaction is ‘oh that’s used for drugs and money laundering.’ With the recent conversation focused around blockchain technology, bitcoin has passed a threshold of legitimacy needed for a reputable institution to at least dabble in,” he said.

However, while Goldman Sachs realises the potential of bitcoin and the blockchain, acting on it is another matter.

A day after news broke of Goldman Sachs’ decision, CEO Lloyd Blankfein took to social media to say that he was ‘still thinking about bitcoin.’

As Bharath Rao, CEO of Leverj, a decentralised exchange for cryptocurrency derivatives, says:

“A large financial institution will not jump straight into a market until it has checked the boxes for the necessary operational readiness, regulatory certainty, and technical depth.”